Buy-Rated Big-Bank Stocks to Trade Pre-Earnings
The BKX includes the four banks considered "too big to fail." If you are already long any of these stocks you should consider shifting from a "buy and hold" investment strategy to a "buy and trade" strategy to take advantage of the ups and downs in the price of a stock; use GTC Limit Orders to buy weakness to a value level, and to sell strength to a risky level.
The daily chart for BKX ($52.89) is overbought with the 21-day, 50-day and 200-day simple moving averages at $51.34, $49.78 and $47.77. The BKX traded to a 52-week high at $53.76 on Jan. 4 vs. this week's risky level at $53.69.
My monthly and semiannual value levels lag at $47.92 and $47.58, which is the downside risk on a disappointing earnings season. The upside potential is to the April 2010 high at $58.81.
Chart Courtesy of Thomson/Reuters
The finance sector is 12.8% overvalued and there are four of 16 sectors more overvalued. Between Friday and Jan. 28, the 17 banks I am profiling report their fourth-quarter earnings results, with 13 of them like a wave between Jan. 15 and Jan. 18. Today's table shows the date each bank reports and the current EPS estimate.
At www.ValuEngine.com we show two of the 17 stocks rated strong buy and 15 stocks rated buy. We show six bank stocks overvalued by 0.4% to 14.6% overvalued. The other 11 are undervalued by 1.9% to 30.9% undervalued.
All 17 stocks had double-digit returns over the past 12 months with gains of 14.0% to 83.2%. The forecast one-year returns are not that robust, between 5.5% and 12.9%. Five of the banks have single-digit price-to-earnings ratios and 12 have reasonable P/E between 10.0 and 19.1.
Reading the Table
OV/UN Valued : The stocks with a red number are undervalued by this percentage. Those with a black number are overvalued by that percentage according to ValuEngine.
VE Rating : A "1-Engine" rating is a strong sell, a "2-Engine" rating is a sell, a "3-Engine" rating is a hold, a "4-Engine" rating is a buy and a "5-Engine" rating is a strong buy.
Last 12-Month Return (%) : Stocks with a red number declined by that percentage over the last 12 months. Stocks with a Black number increased by that percentage.